David Cameron is “very relaxed” about publishing his tax returns and believes
the “time is coming” for politicians to be more open about their personal
finances.

However, such a move is likely to lead to demands for Mr Cameron to make further disclosures about the extent of his wealth which is not necessarily covered by the annual records provided to the tax authorities.

“The Prime Minister is relaxed about the idea of the tax returns of senior Cabinet Ministers being published, but wants the opportunity to explore how this might work,” a source said.

Last night, David Davis, the former shadow home secretary, said that while he opposed the publication of personal tax records, any proposal should also cover the disclosure of other wealth.

He said: “This will induce the politics of envy – but if you are going to do it, you have got to cover everything: wealth, trusts, whether you are a beneficiary of trusts, whether you are going to inherit things.

“If you want really to know about someone’s tax affairs you have to know about more than just someone’s tax return. You have to know their assets, the potential inheritances, if they are going to be the beneficiaries of upcoming trust funds – all those things.”
Should ministers be forced to publish their tax returns?

The Government is not expected to make a decision on publication of tax records until after next month’s mayoral elections.

The Prime Minister believes there are arguments for and against publication that will need to be heard and ministers will have to think through the consequences.

Mr Cameron is known to have discussed the issue a number of times with George Osborne, the Chancellor, who said last week that he had not “set his face against” disclosure.

In an interview with The Daily Telegraph, Mr Osborne said the Government would “think through” making senior politicians reveal their tax returns but that he would be “very happy” to consider the proposal.

Vince Cable, the Business Secretary, also became the first Cabinet minister to say he would be happy to see his current tax returns published. He said he would have “no problem” with being open about how much tax he pays.

Several Cabinet ministers are thought to have concerns about publishing details of their returns. Yesterday, a source close to Andrew Mitchell, the former banker and International Development Secretary, said: “Andrew will happily abide by whatever is decided”.

Other ministers were unavailable to comment on the proposals during the Easter parliamentary break.

Labour has refused to pre-empt the Government by publishing the tax returns of its senior figures. Yesterday, two of the party’s shadow ministers said that they would be “happy” to release details of their affairs.

Tom Watson, the shadow cabinet member and Labour deputy chairman, said: “On the tax thing, I very much believe in more openness and transparency in government. When I was a minister we set up the open data initiative. I know the Government are saying they are going to bring forward proposals and we will match them.”

Andy Burnham, the shadow health secretary, said: “Sitting alongside the country’s foremost crusader for openness and transparency (Mr Watson), how could I say anything other than 'yes’?”

The issue has risen up the agenda since candidates in the London mayoral election revealed their tax returns, following a bitter row in a public radio debate over their personal finances.

It emerged that Ken Livingstone, the Labour candidate, was being paid via a company which could reduce his tax bill.

Boris Johnson, the Conservative Mayor, published a signed letter from his accountant showing he paid around 40 per cent in tax on £1.7 million earned over four years.

On Sunday, Grant Shapps, the local authority minister, said BBC presenters and other senior figures in the public sector could be forced to publicly publish their tax returns under Government plans to increase transparency. Earlier this year, it emerged that some senior public sector officials were being paid via private firms, which can reduce tax bills.

Candidates for the US presidency and party leadership routinely share details of their tax affairs with the electorate.

Sir Alistair Graham, the former chairman of the Committee for Standards in Public Life, has said he would like a “public debate” on whether politicians should publish their tax details.

However, he has expressed concerns that asking too much of future politicians will drive the best candidates away from taking up roles in public life.